IBRA hopes to collect more than $2b from loan sale

IBRA hopes to collect more than $2b from loan sale

The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) is optimistic it
can obtain at least Rp 20 trillion (about US$2.21 billion) in
proceeds from the current sale of some Rp 145 trillion in bank
loan assets.

IBRA deputy chairman for Asset Management Credit (AMC)
Mohammad Syahrial said on Thursday the figure only represented
the minimum amount, as a complete assessment of the bids,
submitted by bidders on Wednesday, had yet to be done.

"That's the minimum; it could be more. Overall, I'd say that a
recovery rate of up to 25 percent is attainable," Syahrial told a
media gathering.

The agency has been hoping for a recovery rate of 20 percent
to 30 percent on the face value of the loans.

However, Syahrial went on, the Rp 20 trillion alone would be
enough to lift the rupiah to around Rp 8,000 against the U.S.
dollar by the end of the year.

"Especially when the winning investors (foreign) make their
payments because they will have to convert their funds into the
local unit. Even if the loans are in dollars, we still have to
convert them into rupiah before we hand the payments over to the
government," he said.

Of the total loans, 46 percent are valued in dollars.

The loans are a combination of unrestructured and restructured
nonperforming loans. IBRA took over the loans from ailing banks
and closed down banks in the late 1990s during the financial
crisis.

The agency is mandated to restructure the loans and sell them
to raise cash to help finance the state budget deficit. IBRA is
tasked to raise some Rp 42 trillion this year including from the
sale of loan assets and other forms of fixed assets taken over
from indebted bank owners.

The rupiah has been under pressure lately due to strong demand
from the corporate sector to repay foreign debts. The local unit
is currently hovering around the level of Rp 9,000 per dollar,
compared with around Rp 8,500 in April. The state budget assumes
an exchange rate of Rp 8,000 per dollar.

Syahrial said that investors who submitted bids below the
floor price set by IBRA would be allowed to make a new offers.

"If we can work hard in negotiating with those investors to
increase their bids, the figure (proceeds) could eventually
increase," he said.

He refused to name how many investors had made bids below the
required floor price.

The price was set by the agency and is aimed at keeping the
recovery rate at a respectable level.

IBRA Chairman Syafruddin Temenggung has said that the agency
would cancel the sale and repackage the loans if the bidders
continued to offer a lower price up to the August deadline.

As for addressing lingering fears that old debtors might buy
back their assets at huge discounts, the agency said it would do
whatever it was capable of to prevent that from happening.

Sumantri Slamet, IBRA deputy chairman, said that currently the
legal review was still ongoing, one of the main tasks of which
was to identify whom the bidders were.

"And if the investors turn out to be the old debtors, we shall
cancel the transactions," he said.

The government has ruled that the old debtors must not be
allowed to repurchase their debts from the agency.

Nevertheless, many would argue that such a move would be
insufficient to prevent old debtors from repurchasing their
assets.

Analysts have repeatedly said it would be almost impossible
for the agency to trace old debtors if they acted through third
parties.

IBRA said that it had received official bids from 203, or 82
percent of 248 investors who had submitted a written expression
of interest and had registered to bid. Of those who had
registered, 91 were foreign investors.

IBRA will select the winning bidders on July 24.